February 28, 2020

China Covid-19 update: Slaughterhouses clear broiler queues; feed additives shortages lift prices (Feb 25, 2020):
As the China government encouraged Chinese citizen to return to work and ordered local governments to ease traffic controls, inure-province logistics improved considerably and more factories and companies are opened. However, cross-province travelling and transportation remained difficult and the production rates of factories were between 20% and 50%.
Meanwhile, low turnout rate of workers has resulted in a long queue of broilers, a lot of which were about 50 days or older, waiting to be slaughtered over the past couple of weeks. For instance a slaughterhouse in Fujian Sunner, a big broiler company with over ten thousand workers, only had less than a thousand reporting to work.  Market participants estimated that slaughterhouses should be able to clear the queue of broilers, to be slaughtered by the end of this week. However, cold storage facilities of slaughterhouses were almost full as poor businesses of restaurants and the close down of canteen operators slashed the demand for chicken products.
While chick replenishments practically stopped between mid-January and mid-February, and many farms culled chickens due to lack of feed or hastily released broilers to cut losses, China's broiler inventories have shrunk tremendously. Additionally, broiler farmers, especially native speciesfarmers, will be reluctant to expand flocks in the near term- which means the recovery of broiler population will be very sow . Slaughterhouses mounting chicken storage should help sustain supplies in the coming two to three weeks, particularly as schools have not resumed lessons, workers are still in their hometowns, and restaurants and canteens are mostly closed. Should the epidemic situation improve gradually and demand recovers, China is expected to face severe broiler shortages between late March and June. If the epidemic situation improves fast, the industry may recover entering Q3. Native broiler farmers, who are suffering heavy losses, will be extremely cautious.

Feed additives

Although the deliveries of livestock products and feed have eased as the government issued orders to give priority to these products that would affect the livelihood of people, feed producers continued to face shortages of feed additives. Due to tight availability, resulting from slow production recovery, low excess stocks and delivery woes, prices of vitamin B1 nave surged 120%while those of biotin soared over 80% compared with pre-Chinese New Year levels. Meanwhile, tryptophan prices have climbed about 25% over this period. Prices of all other products have moved higher, albeit at a slower pace.

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